Precious metals every bit as explosive as Secretariat at the Belmont Stakes

May 4, 2016 02:10 PM

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The charts tell the story, says precious metals expert Michael Ballanger, adding that the mining and metals market have the forward momentum of Secretariat as he clinched the Triple Crown.

Today’s missive is going to be exceedingly “chart-infected,” because many times a picture is worth one thousand words, especially in the case of the precious metals markets these days. I put on a 2% hedge prior to the FOMC meetings and the Wednesday press release and have since removed it, taking a small hit versus the mindboggling leap in my GDXJ position and associated advances in the juniors (KAM.V over $2). That’s the beauty of a “hedge” versus a “short,” and that is precisely what I have been thinking since the COT moved above 200,000 Commercial net shorts a few weeks back, with the gold and silver prices refusing to retrace.

One look at the chart below and you are immediately struck by the “shock and awe” campaign of “no corrections,” where the market doesn’t allow traders to buy back their favorite mining positions at prices representing only the meagerest of percentage pullbacks. In fact, after nearly 40 years of trading the miners, I have never ever seen a market with such awesome power behind it that is truly such a wonder to behold. The HUI has exploded out of the post-FOMC gate like Secretariat at the Belmont Stakes in 1973. (If you ever want to see an incredible feat by a horse, watch the Youtube clip of the race that clinched the first Triple Crown in 25 years AND was won by an incredible 25 lengths.) Just as that horse left the pack at the halfway point of the race, precious metals are massively outperforming the S&P by a vast margin, and are forcing the money managers to be dragged into the market, teeth clenched and fingers clawing the ground.

The miners are all collectively on wheels again and all of the mining brokers and analysts are all busy replacing 10-year-old business suits and paying off loan sharks and second and third mortgages taken out during the tail end of the 2011–2015 bear market. Six-year-old BMWs and Benzes are being turned in and brand-new ones are being leased off the lot as visions of corporate-finance-bonus sugarplums dance in their heads. Those financial advisors out there feeling the heat are the ones still flogging Netflix and Apple and the biotechs, but even Facebook, which hit a record high today, is still only up 11%.

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